Ryanair in high-level meetings to push takeover

RYANAIR expects to hold meetings with the Government and Aer Lingus shareholders over the coming days.

If Ryanair gains control of Aer Lingus, it would be the first time one of Europe’s formerly state-owned carriers fell under the control of a no-frills airline.

However, NCB analysts said Ryanair’s bid to buy Aer Lingus will probably be thwarted by regulators concerned that a tie-up would give Europe’s largest discount carrier too large a share of the Irish market.

“A Ryanair/Aer Lingus combination would control 83% of short-haul seats from Ireland. We expect competitive issues will remain too great an obstacle for the Irish government and regulators to clear,” said NCB analyst Neil Glynn.

Aer Lingus rejected Ryanair’s €1.40-a-share bid on Monday, saying the offer was too low. Aer Lingus has also advised its shareholders not to take action.

Ryanair is the biggest Aer Lingus shareholder with 29.82%. It would pay €524 million for the rest.

The Government has a 25.1% stake in Aer Lingus, which was privatised in 2006, while employees hold 14.2%. A further 30.8% stake is held by other investors including a 2.27% holding by investor Denis O’Brien.

EU regulators blocked Ryanair’s initial attempt to buy Aer Lingus in 2006 because of concern that combining the two Dublin- based airlines would lead to a monopoly on 35 routes.

Education and Science minister Batt O’Keeffe said on Monday a merger of the two airlines at this point “would not be in keeping with government policy”.

Ryanair’s fresh bid was just half of what it offered in 2006. Ryanair expects to publish the offer document by the end of the week.

Aer Lingus shares rose 4c, or 3.1%, to €1.32 in Dublin trading after surging 14% on Monday. Ryanair fell 0.9% to €2.77.